The past weekend saw the Huobi crypto exchange record a massive amount of outflows totaling $64 million.
According to DeFiLlama, this has resulted in the total value locked (TVL) on the platform declining from $3 billion a month earlier to $2.5 billion currently.
An angel investor, fintech executive, and a well-known crypto Twitter analyst, Adam Cochran recently made statements about the financial instability of the Huobi crypto exchange that has raised eyebrows.
The analyst mused that it was likely Huobi’s insolvency that was leading to Tether’s sell-off and added that the last month had seen some strange balance shifts on the crypto exchange.
These observations were also connected with rumors that had been going around recently about the police questioning executives of the crypto exchange as well as those from the blockchain platform Tron which was founded by Justin Sun, the crypto entrepreneur.
In fact, Cochran even shared a list of names of those who had been detained, which included the exchange’s head of chain tech, product, server operations, and human resources.
All of these individuals report to Marus Zhong, the CTO at Tron. But, the tweet in question was deleted later.
Cochran also shared his theory about why Binance might be selling its Tether holdings and came up with two reasons for it.
He said that the exchange may want to bring down the stablecoin to replace it with one they can control and benefit from.
The second reason he gave was the possibility that Justin Sun may not have the USDT he claims to have and once that comes to light, there could be a massive selloff as people would try to leave his exchange.
Cochran went on to share his understanding of the holdings of the Huobi crypto exchange. He said that its total assets were just $90 million, which included both USDC and USDT reserves.
He alleged that according to the ‘Merkle Tree Audit’, users of the Huobi crypto exchange have $630 million worth of USDT and the wallet balance is around $631 million.
However, he said that this was just what users believe because the actual balance is just $90 million and nothing more.
According to Cochran’s theory, the funds that are missing are being used for propping up the yields of the other DeFi apps that Sun owns, including Poloniex and Tron.
He added that even those amounts are not enough to fulfill the total obligations of the Huobi crypto exchange.
The head of social media of Huobi took to Twitter after these claims and clarified that the police involvement reports were just rumors.
She also asserted that Huobi operations were normal and said that the information source needs to be investigated in order to avoid FUD.
Cochran did not back down and said his source was a Tron executive who had been working at the company for years.